Business Loan In order to understand how a business loan works, imagine borrowing a capital to fund a startup or pay for an existing business’s expansion without pledging anything against the borrowed amount. A Business Loan is thus an unsecured loan at an interest rate, giving you access to credit that can be paid back over an agreed time along with the interest, without any security against it. Business Loan.
What are the benefits of having a business loan?
Other loans can help you borrow over a longer period – if, for example, you need to pay for one-off business expenses, or to fund expansion plans.
With some lenders – known as “peer-to-peer” lenders, you can borrow from people, rather than from a bank. With this type of loan, you may be able to choose from a secured loan, an unsecured loan, or an asset finance loan.
With some types of business loans, you can set out how much you want to borrow and for how long. Some offer flexible repayment options, while others come with no early repayment fees.
Start-up loans can offer a big loan when you first set out running your own business, while small business loans can prove vital when managing the demands of employees, clients and cashflow for a small business.
Business loans can help with cashflow, and help to tide you over when times are tough by offering access to short-term finance.
What is the best way to compare business loan?
Compare the below three things before applying for any business loan:
- Per month’s EMI
- Processing Fee
- Prepayment charges
If You want to pay the loan in the tenure, the sum of 1&2, whichever is lowest, take the loan from that Bank.
If you think you might have cash flow and can pay earlier, then also check the prepayment charges.
Checklist of Documents Required for Business Loan
- Identity proof- Driving License/PAN Card/ Passport / Voters ID card
- Address Proof (Ration card Tel/electricity Bill/ Passport/ Trade license / Lease agreement/ Sales Tax certificate)
- Bank Statement
- Latest ITR along with computation of Balance Sheet, income & Profit & Loss a/c for the last 2 yrs.
- Proof of continuation
- Other Mandatory Documents such as Sole Proprietorship Declaration, Certified true copy of Memorandum & Articles of Association
- Last 3 years audited financials.
List of Common Documents Required for Business Loan
- Application Form: Complete loan application form with one passport size photograph
- Valid Proof of Applicant’s Identity: Passport, Photo PAN card, Voter’s identity card , Driving license and MAPIN card
- Proof of Residence: Ration card Tel/ Lease agreement/ Electricity Bill/ Passport/Trade license /Sales Tax certificate
- Proof of Age: Passport, Photo PAN card, Voter’s identity card
- Financial Documents: Copies of IT returns for the last two years along with the latest Bank statements for 6 months and P & L and balance sheet for last two years audited by a C.A.
Self Employed Individuals – Non Professionals: P & L and balance sheet for last two years audited by a chartered accountant and Copies of IT returns for the last two years and Bank statements.
Self Employed (Private Ltd. Co. and Partnership Firms): P & L Copies of IT returns for the last two years and P & L and balance sheet for last two years audited by a chartered accountant.
Self Employed Individuals – Professionals: Copies of IT returns for the last two years and Bank statements for last 6 months and – Professionals: P & L and balance sheet for last two years audited by a chartered accountant.
What is Business Loan
Small Business Loan – provided to small businesses Loan for various purposes by a lender. These loans may have less restrictive requirements, enabling the small business Loan to secure the funds. small business loan may provides other incentives for the borrower, which could minimize expenses for the business.
Required Documentation for Long Term Small Business Loans
small business loan is Long-term loans can be difficult to qualify for, and the application process can be lengthy. SBA loans are a great example of this. These loans are guaranteed by the Small Business Loan Administration but are actually borrowed from a traditional lender like a bank.
You’ll typically need to gather the following documents before you apply for an Small Business Loan –
- Detail allocation of how you’ll use all funds
- Proof of business ownership
- Loan Application history
- Business overview and history
- Current business financials
- YTD P&L (profit and loss) statement
- YTD balance sheet
- Business tax returns (2 years)
- Projected financials (1-3 years)
- Business licenses
- Business leases
- Personal financial statement
- Personal tax returns (2 years)
- Owner resume
Small Business loan loan provider who gets these long-term loans closed quicker than anywhere else we’ve seen. While Business Loans these loans typically take 45-120+ days to close.
Typically, Business Loans no others types of loan will requires more than these traditional loan do at the time of application. To learn more about the overall process you can read our article on how to apply for an Small Business loan.